David Cameron has launched the Conservatives' local election campaign amid pressure from close allies to take a harder line on immigration and welfare.

The prime minister used a rally in Nuneaton, Warwickshire, on Friday to outline a campaign that will focus on the cost ofliving, pointing to council tax freezes in some Tory-controlled councils.

Cameron claimed the only real choice for voters was between the Tories and Labour. But behind the scenes, he is being urged to take a tougher and more traditional approach by ministers and special advisers which may appeal to voters who are moving towards Ukip.

Senior Tories say the launch follows a contemplative week for the party as it has examined the legacy of Lady Thatcher, whose funeral was on Wednesday. Cameron has claimed to be her political heir, but is widely seen by backbenchers as less decisive and with fewer convictions.

In a 10-minute speech to local party activists, Cameron focused on the threat from Labour and afterwards told reporters the "real choice is red or blue".

Earlier, in his speech, he did not refer once to the Liberal Democrats or to Ukip.

Asked if he was worried about any predictions of a bad result for the party on election night, he said he would leave speculation to "the pollsters and pundits". Cameron said he was only interested in "fighting a positive campaign … The choice is between: do you want Conservative councils keeping bills down or do you want Labour to rack up your bills. That's what this election is about."

He added that his party had got rid of the controlling approach to councils favoured by John Prescott, the local government minister under the last Labour government.

"The regional development agencies, regional assemblies, regional strategies, government offices for the regions, the local area agreements, the Standards Board, the comprehensive area assessment – all gone. We've given councils much, much more freedom."

Cameron also attacked Ed Miliband for a report in the Independent that claimed that Labour plans to outspend the Tories – a claim denied by Ed Balls, the shadow chancellor.

"The scale of the challenge is actually laid bare today because this is the day when the leader of the Labour party is turning left.

"More spending, more borrowing, more debt – that is what he's calling for, more of all of those things that got us into this mess in the first place," said Cameron.

On welfare reform, Cameron said taxpayers were fed up with their money being spent on the benefit bill.

He said Labour had created "a culture of entitlement" when in power but despite tough talk had not backed the government's recent changes.

"We're putting fairness back at the heart of our welfare system" with the introduction of the universal credit, an income tax cut, and a £26,000 benefit cap."

He added: "We're building a country where if you put in, you get out. We're saying to each and every hard-working person in our country, we are on your side."

Cameron said the Conservatives were "fighting for the pound in your pocket", and claimed it was "a moral imperative" to keep council tax down.

"We're fighting to keep it there because we get something, it is your money, not our money and not government money."

The elections will be held in 35 English councils on 2 May. Twenty six of the 27 non-metropolitan county councils up for grabs are held by the Conservatives; three of the eight unitary authorities where elections will be held are also Tory-led. Direct mayoral elections will take place in Doncaster and North Tyneside.

Polls show Labour has a national lead over the Tories of about 10 percentage points. But senior Conservatives believe that they face a greater threat from Ukip which is currently riding third in the polls on 15 per cent, while the Lib Dems trail in fourth.

One minister said: "We want to move on now to touchstone issues. Ukip are doing well, but not just because of Europe; they are doing well because of immigration controls, crime and tough welfare reform proposals."